Initial Investment – Where to start

Sitting in the Young Enterprise sessions recently, it occurred to me that I was sitting in a room where it was more than likely many of the students in that room would one day run a business and that these students might need investment to make their ideas a reality. However this can seem like a daunting exercise to many, but actually it’s something in everyone’s reach. So where to start…

It doesn’t matter how good an idea you might have, how brilliant your vision might be or even how good your business plan is until someone agrees with you and says – YES I am going to invest. Convincing someone to say YES is something you can’t do with made up numbers or sketchy plans. Someone says YES because they like your idea, believe you have the strategic intelligence to move it forward and because they like you (you being an individual or a team). Countless business plans have been created at breakfast tables, desks, offices, but have gone no further as they have not managed to gain that initial early investment.

We’ve been extremely fortunate at 7billionideas to be successful now in two rounds of investment, raising a total of £46,000. I don’t use the word lucky deliberately, because I know how much hard work my leadership team have put into both rounds of investment. In each situation we had to ask ourselves one question – What is our business goal? Once you have addressed that, you can then begin to work backwards, working out what you now need in order to move forwards. Only when you think strategically can you really start planning in a business format.

In our first round of investment, the goal was to raise enough money to build our initial pilot website, which would help to prove the concept worked and then allow us to push for round two of investment. In November 2011, we had plans but no product, plans but no user base, plans but no investment. This did not matter because we had a vision. We knew we needed a set amount of money to get our business rolling, but how can you value something which hasn’t been created yet. The key – don’t be too greedy. No one will invest. You must remember you are at the start of your journey, have achieved nothing yet and that people are giving up valuable hard-earned cash to invest in your business venture. Therefore, you must respect and honour that.

There will be a very good chance that in your first stages of investment you will typically target ‘Friends and Family’ as we did at 7billionideas. The typical investment journey companies might go on is – Friends and Family, Angel (outside single investor) and then Venture Capitalists (larger strategic organisation). We have followed that route for the first two parts. If we ever did look at VC investment we would stick with our tried and tested process – What is our business goal? What do we need? What is a fair valuation now? And – DON’T BE GREEDY, BE FAIR.

I think people have invested in 7billionideas for 3 reasons – Our PLAN, our PASSION and our PERSONALITIES. We have proved that despite the difficult economic times, if you have the right make up, the correct character and an idea worth investing in, it will happen. The point I want to make is you need to be prepared for what follows. Money doesn’t grow on trees. Money is hard-earned. When it is entrusted in you, everything changes. It becomes time to put your plans into reality. To drive your business forward. To begin delivering the results. Every penny seems to have become more valuable than the last. You see things from a different perspective. Ultimately the pressure rises and you must be ready to deliver and meet your shareholders expectations. However, if you have the guts to write a plan in the first place, I have no doubt you’re the kind of person who would thrive under this new pressure and have the passion and courage to carry on.

I have no doubt the next generation of entrepreneurs and intrapreneuers which are coming out of Surbiton High School will one day be considering securing investment for their own companies or for big projects in a corporate environment. If you have a strong plan, mixed with passion and personality, you’ll succeed, just remember not to be too greedy. Gaining investment is in everyone’s reach, just make sure you think through your goals, know how you’re going to get there and value your idea appropriately. You’ll then succeed.

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